Please give me clarification on new SEBI margin rules. Suppose if I sell 100 shares of Reliance can I buyback 100 share of reliance intraday by pledging my other shares in my holdings ? and what worth of shares I need to pledge if buyback is allowed ?
When you sell 100 shares of Reliance, the 20% of sale proceeds will be blocked (this will be available the next day), the 80% which you will get can be used for other trading purposes, you can also use the sale proceeds received to buy back the Reliance shares again, but as you have received only 80% of the sale value if this are the only funds in your account you will be able to buyback only 80% shares. If you have additional funds in your account you can buy back 100% shares sold.
Also, you cannot use collateral margin received from pledging securities to purchase shares, you will need free cash for this.
Continuing the discussion from Peak margin, Intraday leverages, & 2nd order effects - Dec 1st 2020:
I HAVE BOUGHT SHARES ON FRIDAY AND KITE IS NOT ALLOWING ME TO SELL THOSE SHARES SAYING BRING MARGIN, WHY I AM NOT ALLOWED TO SELL THOSE SHARES TODAY ?.
Can you message your ID so we can get this checked?
Continuing the discussion from Peak margin, Intraday leverages, & 2nd order effects - Dec 1st 2020:
IS BTST ALLOWED ?
Yes BTST is allowed as well. For this too 20% of the sale value will be blocked and 80% will be available for trading.
Continuing the discussion from Peak margin, Intraday leverages, & 2nd order effects - Dec 1st 2020:
I AM REALLY SORRY . I WAS USING MIS ORDER.
Selling in MIS requires margin, if you want to sell stocks from your holdings you will have to use CNC.
Sir,
Today, I sold holdings with the amount of Rs.20677 ,but the amount showing less with the deducted of amount 4000 .so is this a penalty or will get back that amount
This is not a penalty, from today onwards when you sell stocks from your Demat account or T1 holdings, 20% of the sale value will be blocked, this will be given to you the next day. The remaining 80% you can use to trade. We have explained this in detail here , please read.
20% blocking method is permenent or temprory
This is here to stay, unless there are changes to the rules by SEBI.
Hi @ShubhS9,
What is the current MIS margin offered by Zerodha for Selling Index Options.
The latest bulletin shows 3.7X but as per the margin required in Basket order it comes to 2.5X (62K)
What is the correct leverage for MIS index option selling
1 Like
A bunch of questions, would appreciate a detailed reply:
1- Margin from pledging stocks: will this be considered for peak margin requirement?
2- What happens if there is a FNO position(intraday) of peak margin requirement: 20L.
There is margin from stocks: 20L and liquidbees/overnight fund of 5L. Will this combination cover the 50% from stocks and 50% cash requirement? Will there be interest charged(zerodha or SEBI) on the missing cash requirement?
3- Is the snapshot time defined?
4- Anyway/alert to know when peak margin is being exceeded before trade execution? API or other?
5- For people using API this will imply a lot more backoffice information required, are you guys working on this? If yes, when can we expect it to happen?
6- The peak margin penalty is 0.5-5% of the trade value. Can you please explain this in terms of a BANKNIFTY futures trade? Which of the percentages get applicable here and on the trade value or i.e. Lots x Banknifty price or the shortfall in margin?
Thanks
Same way as eod margins, 50% cash and 50% collateral is required for peak margins.
No.
No way but don’t do intraday fno trade from proceeds received from holding if you intend to buy back the same stock before close of the market with no extra funds in account.
Nothing as such.
Can check this.
1st day of peak margins. Impact doesn’t seem much, especially considering that the first Mon/Tue after monthly expiry typically has lower volumes. As expected, options trading lesser impacted than futures.
Btw, why the restrictions on intraday leverage by SEBI? There were a few excesses that may have led to this. I remember a few brokers allowing Intraday shorting of Nifty options before for Rs 2000 when SPAN+Expo= Rs1.5L. Brokers taking aggressive risks = systemic risk.
5 Likes
@nithin we always talk about systematic risk. But lets say today is Thursday expiry and say I short next week 30000 PE. And go long on this week’s 30000 PE for two lots, which is expiring today. Now the margin requird for above trade would be near about or less then 20K. So for 20K margin client could potentialy carry naked short position in markets. How do you handle above scenario. Even I use this when I am not worried of margin penalty.
@nithin - now some how people will get adjusted to it.
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I want to know what is that you will be doing from zerodha end to protect client not going into penalty scenario, will you improve your RMS system so that it closes position automatically if client has negative balance.
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here we have 2 things.
Issue 1 -the whole issue was due to excess margin provided by brokers to take positions
Issue 2 - margin increase due to
movement of market or close of hedge position or physical delivery margin increase
Shouldn’t both issues addressed differently, goal should be to address or penalise issue 1 and your RMS systems can take care of 2nd one
Yeah, we are working on few things to reduce cases which can lead to penalty for clients.
2 Likes
Continuing the discussion from Peak margin, Intraday leverages, & 2nd order effects - Dec 1st 2020:
Any update on this?